Unpaid payroll taxes are a serious matter to the IRS and are some of the worst kinds of back taxes you can owe. If you’re a small business owner with a payroll tax problem, read on to learn what you can do to avoid the IRS crippling your business or worse, shut your business down completely.

Already in payroll tax trouble? Contact us to schedule a free, no-obligation consultation and let’s get your payroll tax issue resolved. Get help from Ron Friedman, CPA.

Why Small Business Owners Get into Payroll Tax Trouble in The First Place

It’s hard being a small business owner today, trying to pay your employees their paychecks every week, and pay the IRS all those payroll taxes!

A lot of times when money is short, you pay the employees first.  It’s a natural thing to do—you need to take care of your employees, even if you have to skip paying yourself!  Besides, if you don’t pay them, they’ll quit and you will have to hire new people all the time.

It can seem easy to “just pay the 941 taxes next pay period” and give yourself a little cash flow cushion, but skipping paying your employees payroll tax deposits is never a good idea.

What happens too often is 1 pay period turns into 2, and 3, and 4, and eventually you’re so deep in payroll tax debt that the only thing you want to do is completely ignore your problem.

Except the IRS doesn’t care about your financial problems. They just want you to pay your payroll taxes!

The IRS doesn’t care if you can’t pay your employees.  They don’t care if they put your employees out on the street. They don’t care if you can’t collect your receivables.  They don’t care if one of your largest and best customers just went “belly-up”. All they care about is you have money that belongs to them and they will do whatever they have to, even put you out of business, to collect it. They don’t care who you are, or even what business you are in.

Penalties are The “Kiss of Death” When it Comes to Back Payroll Taxes

Penalties for failing to file and pay your payroll taxes are the “kiss of death” for any small business owner. They tack on penalties totaling 33% in just the first 16 days! And it doesn’t stop there.  The IRS adds interest on top of the penalties too. It is not uncommon that a payroll tax liability doubles in short order. And if you don’t pay them or work something out, they will shut you down!  It’s much less work for the Revenue Officer, as most are lazy, to simply close you down than work out an arrangement with you.

They IRS Will Collect or They Will Shut You Down!

It’s as simple as that.  The IRS is the most brutal collection agency on the planet.  They have more authority than the President of the United States! And they have all the ways and means to do whatever it takes to collect what’s owed to them.  You didn’t wake up in the morning, go to work, and say to yourself, I’m not paying my payroll taxes because you didn’t want to. The money simply wasn’t there.  It’s not your fault.  One week you’re short of cash.  It was a slow week, a customer’s check bounced, or any number of legitimate reasons that just prevent you from paying the IRS.  You’re a good person.  You figure you will make it up the next week.  But then next week comes and goes, and you realize you still don’t have enough money to make that payroll tax deposit.  And then the entire situation starts “snow-balling” into an avalanche.

Should You Call the IRS To Get Your Payroll Issue Fixed?

If you were to call the IRS, and were able to get through after waiting on “hold” for an hour or two, and try to explain your situation—you might as well have a conversation with the wall—because they don’t care.  The IRS representative that you’re talking to probably makes less than $20 an hour, and is poorly trained.  Do you think they ever had to make a payroll in their life? Do you think they know what it’s like running a small business? Do you really think they will have any sympathy for you?

Not only is the answer “NO” but they can also dictate the fate of your case. What they will try to get, while you’re on the phone, is all your personal and financial information.  They want to know where you bank; they’ll want to know all about your customers who owe you money, they’ll want to know about the value of all your assets, like your home, cars, motorcycles, etc. Why? Because, now they have all the information they need to levy your bank accounts, take your receivables and seize your property.

Now that you know you shouldn’t be talking to the IRS because they are not going to help you, you might be wondering what you should do?  Where should you turn for help?  They smartest thing you can do to protect your business and family is to have someone represent you—someone who deals with the IRS for a living. You need to get help—but not just from anyone—you need help from someone who is an experienced competent professional, and deals with the IRS every day, helping small business owners keep their businesses and settle IRS payroll tax problems.

If you were charged with a serious misdemeanor or felony, would you go to court without a lawyer? You don’t want to represent yourself before the IRS either. You need professional, expert representation.

Reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem Get help from Ron Friedman, CPA. Our expert tax resolution professionals know how to navigate the IRS maze.

Once you decide to retain us, we step into your shoes and protect you from the IRS’s abusive tactics. We take over all communications from the IRS on your behalf. You don’t have to speak with the IRS anymore. We do.  Not only that—they are not allowed to talk to you once you’ve signed our Power of Attorney!  Once they realize you have someone on your side protecting you, who knows their tricks as well as they do, they have to step back and follow the law.  Not only can we protect you from the IRS harassing you, calling you, and showing up at your front door, we can get those penalties reduced, and in some cases, completely removed!

Contact us now and let’s get your payroll tax issue resolved! Get help from Ron Friedman, CPA.

Even for honest taxpayers, the IRS an be extremely frightening. Unlike most other government agencies, the IRS has unbridled power to attach your wages, freeze your bank account and even confiscate your property, and that is enough to send a chill up the spine of any taxpayer.

If you receive a letter from the IRS saying that you owe additional taxes, it is important not to panic. It may be a frightening situation, but there are things you can do to settle your tax debt and get back on the good side of the IRS.

Taxpayers do have options when resolving tax disputes and paying additional taxes due, and simply knowing what those options are can set your mind at ease.

As an expert Tax Resolution Firm, we encourage all readers facing a tax problem, whether it’s the feds or the state, to contact us for a free consultation. Get help from Ron Friedman, CPA.

Here are three strategies you can use to resolve your tax debt and get on with the rest of your life. Not all of these options will be right for everyone, but it is important to be an informed taxpayer.

Review the Amount Owed And Your Tax Return In Question

If the IRS says you owe money, you should not simply assume they are right. The tax agency does make mistakes (a lot), as do tax preparers and ordinary taxpayers.

Whether you filed your taxes on your own or hired someone else to do it for you, it is important to examine your return and compare what you find with what the IRS is claiming. It pays to seek professional help for this tax review, even if you originally filed your own taxes. A professional with IRS experience may be able to uncover errors and inconsistencies you would have missed on your own, and that could end up saving you money.

There is no guarantee this review will eliminate the extra taxes the IRS says you owe, but it never hurts to be sure. There have been many cases in which taxpayers who thought they owed money to the IRS ended up owing nothing – or even being due a refund from the IRS.

Set Up a Payment Plan

Getting a notice of additional tax due from the IRS is frightening, especially if you cannot afford to pay what the agency says you owe. Keep in mind, however, that you do not necessarily have to pay the bill all at once.

The IRS is often willing to set up payment plans with taxpayers, and those payment plans could make paying what you owe easier and less stressful. Once again, it is a good idea to seek professional help and guidance here – the IRS can drive a hard bargain, and you do not want to end up with a payment plan you cannot afford and wind up defaulting on it.

If you fall behind on the payment plan you agreed to, you could be subject to additional enforcement action, including the tax agency garnering your paycheck or seizing funds from your bank accounts. Getting the help of a tax resolution professional up front can help you avoid these serious consequences.

Explore an Offer in Compromise Settlement

If you are truly unable to pay the money the IRS claims you owe, you may be able to work out a (much) smaller lump sum payment. The IRS may not advertise this program, but they are often willing to work with taxpayers by accepting lesser amounts, especially if those taxpayers have little in the way of equity in assets and a limited income. Sometimes these settlements can be for a fraction of what’s owed, if you qualify. We offer a free no obligation consultation to find out if you qualify. Get help from Ron Friedman, CPA.

If you plan to explore this last option, it is critical that you work with a tax resolution expert. An offer in compromise can be extremely complicated, with legalese and language that can be difficult to understand. You do not want to make a misstep here, and you want to ensure that you are only paying the lowest amount, allowed by law, in settlement of your tax bill.

Few things are as frightening as getting a letter from the IRS. That official-looking letterhead is bad enough, but what the letter says is even worse. If you receive such a letter, you need to take positive steps right away. Ignoring the situation will make it worse and it won’t go away, and the sooner you start exploring your tax resolution options the better off you will be.

If you want the help of an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain all your options to permanently resolve your tax problem Get help from Ron Friedman, CPA.

If you took on a side hustle last year to make ends meet and earn some extra cash, you may have found an unexpected surprise when you filed your taxes. If you did not prepare carefully, you probably ended up with a big tax bill for your troubles, possibly with penalties and interest added on.

Given the unpleasant surprises of the past, you may be resigned to a life of higher taxes, all courtesy of the very side hustle you thought would help you gain financial freedom. But before you put away your driving gloves and give up on ride sharing and grocery delivery, you might want to take a second look at your situation.

With the right planning and preparation, your side hustle could actually lower your tax bill, giving you an even bigger reason to keep driving, door dashing and doing whatever it takes to make ends meet. Here are some key ways to make your side hustle pay-off come tax time.

Note: If you fall behind on filing your taxes or owe back taxes to the IRS, you’re not alone and we can help. Reach out to our tax resolution firm and we’ll help you file late tax returns and negotiate with the IRS if you owe back taxes. Get help from Ron Friedman, CPA.

Start By Estimating What You Expect to Earn

It can be difficult to estimate how much you might earn from your side hustle, especially if the time you devote to it and the amount you make varies week to week. Even so, it is important to estimate your income, not only to plan for your deductions but to make advance tax payments as well.

If you expect to earn more than $1,000 from your side hustle, you should strongly consider making quarterly tax payments to the IRS. If you fail to pay ahead, you could end up with a tax penalty when you file, and possibly interest and other charges as well. If you end up overpaying what you owe, you will receive a refund when you file your taxes.

You can start estimating your earnings by looking at how much you made last year. To fine tune the figure even more, you can look at your monthly earnings to date and annualize that figure to determine how much you could earn for the entire year.

Consider a Health Savings Account

If you have a health savings account, either through your employer or purchased on your own, you may be eligible for a health savings account, and opening one could significantly reduce your taxable income, so you can keep more of your side hustle money.

In addition to the tax savings, a health savings account can help you pay for medical expenses, both expected ones and costs that would otherwise have drained your emergency fund. Since the money you put into an HSA if fully tax deductible, this simple step can lower your tax bill quite a bit.

Open a Self-Employed Retirement Plan

If you have a side hustle, even on a part time basis, you are considered self-employed, and that means you can open a retirement plan designed for self-employed individuals. The type of account you can open, and the amount you can contribute, will be dictated by the type of business structure and your earnings, but many of these retirement plans are quite generous in their contribution limits.

If your side hustle is truly a sideline and you have a full-time job with a traditional 401(k) plan, you may be eligible for a SEP-IRA, a unique form of account designed specifically for small business owners and the self-employed. If your side hustle has gone full time, you may want to look at a solo 401(k), a retirement plan that offers high contribution limits and an enormous potential for tax savings. You will need to apply for an employer identification number (EIN) to open this type of 401(k), but you can get that number free from the IRS.

Take Advantage of Your Deductions

Having a side hustle gives you a chance to tax advantage of certain deductions, and using those deductions could significantly reduce your taxable income and boost the size of your refund.

If you run a business out of your home, for instance, you may be eligible for the home office deduction, and that will entitle you to write off part of your mortgage, utilities and other costs. You can also take a standard home office deduction based on the square footage of your dedicated workspace and the size of your home.

In addition to those deductions, you may be able to write off things like office supplies, the cost of internet access and phone service and automotive expenses if you use your car as part of your side hustle or full time business. You should always check with a tax expert before claiming these deductions, as every individual situation is unique.

Side hustles are becoming more common, and that is good news for many wallets. But when tax time rolls around, those partially self-employed individuals will need to do some serious planning to keep their bills in check, including following the steps outlined above.

Life as a freelancer or gig worker can be wonderful, but it’s not uncommon to see self-employed taxpayers land in trouble with the IRS and owing back taxes.

If you do run into tax trouble, reach out to our tax resolution firm and we’ll schedule a free, no-obligation confidential evaluation to explain your options in full to permanently resolve your tax problem. Get help from Ron Friedman, CPA.

If you owe the Internal Revenue Service money and want them off your back, there may be some more good news in store for you. In addition to the Offer in Compromise Program, the Service announced they are now expanding the Installment Agreement requests to include assessed balances of tax, interest and penalties between $50,000 and $100,000. During this trial period, more taxpayers will qualify to have their installment agreement processed in a streamlined manner.

The criterion under testing is this: Individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may experience accelerated processing of their installment agreement request. This will occur if the proposed monthly payment is the greater of the total assessed balance divided by 84 – or – the amount necessary to fully satisfy the liability by the Collection Statute Expiration Date (that’s the last day the IRS is legally allowed to collect back taxes).

An installment agreement is a payment plan for taxpayers who owe money to the Internal Revenue Service. The Installment Agreement is a program that allows taxpayers to pay their tax debts in monthly installments, especially if they are experiencing economic difficulties and, cannot pay the balance in one lump sum.

Is this good news? Perhaps. Is it easy to get into an agreement you can live with? Depends. The first requirement that must be met to secure an Installment Agreement is compliance, filing ALL of your tax returns and being up to date with all of your current tax obligations. Secondly, you may have to demonstrate to the Internal Revenue Service that you really can’t afford to pay that much. To do that, you may need to fill out one or more forms and submit them to the Internal Revenue Service. Then wait for an answer.

Or, you could consult with a Tax Resolution Specialist who knows the ins and outs of how the IRS works. The IRS can be a very scary place for many taxpayers. That’s why it’s crucial for you to do your homework and find a qualified IRS tax relief professional like Ron Friedman Tax Relief Pro. All of these options require IRS forms, documentation and situational analysis.  At Ron Friedman Tax Relief Pro, we’ve proven our expertise and have gotten taxpayers payment arrangements that fit YOUR budget and not the IRS’s.

We encourage you to contact us for your FREE no-obligation confidential consultation.

Till next time,

Ron

Founder and President of Ron Friedman Tax Relief Pro
taxreliefprowestchester.com
ron@taxreliefprowestchester.com
Stop IRS Hotline: 1-800-TAX-FIX0 (829-3490)